Welcome to this week’s edition of This Week in Pensions! This is the news you need to know in the fight for a secure retirement.
Before you dive into our top stories from this week, check out some stories of public employees helping their communities during the coronavirus pandemic.
Here are the top stories from this week:
Milliman analysis: Public pensions’ funded ratio soars to record-setting 78.6% in Q4 2020 by Milliman, Inc. Milliman, Inc. released the latest results from its Public Pension Funding Index (PPFI), which showed that the funded ratio for public pensions increased during the final quarter of 2020, despite the coronavirus-induced economic downturn. According to Milliman, Inc., the average funded status of the 100 public plans in the PPFI increased by 6%, from 72.6% in the third quarter to 78.6% in the fourth quarter. This report shows that public pensions are well-positioned to withstand the current economic crisis since they are designed to pool investment risk over the long-term, leaving members less vulnerable to sudden market downturns than in defined-contribution plans.
Bills would raise legislators’ salaries, increase school employees’ contributions to KPERS by Noah Taborda. Taborda writes for the Kansas Reflector about several new bills that State Rep. Ron Highland has introduced concerning the Kansas Public Employees Retirement System (KPERS). House Bill 2044, would increase employee contributions from school district employees into KPERS from 6% to 7.15%, in exchange for appropriating $40 million to the Kansas Department of Education to provide a 1.15% pay raise for school employees in KPERS. We will monitor this development and others throughout Kansas’ legislative session to ensure all public employees can retire with the dignity and security they deserve after a lifetime of serving their communities.
The economic benefit of defined benefit pensions by Yahoo! Finance. Dan Doonan, the Executive Director of the National Institute on Retirement Security (NIRS), joined an interview with Yahoo! Finance last Friday about NIRS’s latest report on the economic impact of defined-benefit pensions. Doonan highlighted that “pensions remain very important, economically, to this country.” In 2018, for example, almost $600 billion in pension benefits were paid out to roughly 24 million retired Americans, which supported $1.3 trillion in economic output nationwide and nearly 7 million jobs. For this and other reasons, we couldn’t agree more with Doonan’s assertion that “protecting the pensions that we have and honoring those obligations” is “really important to retirees in America.”
9 things you should know about the U.S. retirement crisis by Deb Hipp. In this article for MSN, Hipp writes about some of the major causes of our country’s retirement security crisis. Chief among these is the possibility that workers can outlive their retirement savings and that many workers don’t have enough money saved for retirement. One survey from Northwestern Mutual found that “people think they have a 45% chance of outliving their savings” and that “nearly 1 in 5 (17%) Baby Boomers have less than $5,000 in retirement savings.” Defined-benefit pensions, however, solve both of these concerns because they offer guaranteed income in retirement. This ensures that retirees don’t outlive their savings and that they have enough income to meet their financial needs for housing, healthcare, groceries, transportation, and more.
Be sure to check back next week for the latest news in the fight for a secure retirement!